Hirsch Electronics Corp. and SCM Microsystems Inc., a global provider of smart card-based logical access readers, have entered into a definitive merger agreement. The combination of SCM and Hirsch is expected to make an impact in the escalating market demand for converged security solutions leveraging smart cards and smart chip-enabled devices.

The security holders of Hirsch will receive a combination of cash, SCM common stock and warrants to purchase shares of SCM common stock, with total consideration based on the price of SCM common stock at the time of closing.

“This merger essentially doubles the size of our company and brings significant benefits to our customers, shareholders and employees,” says SCM Microsystems CEO Felix Marx. “Customers worldwide are calling for converged solutions for information security and physical access control, and that is creating demand for a broad set of devices from doors to desktops with support for smart cards, biometrics and contactless technologies. By combining our respective product lines and resources we can address the full spectrum of customer needs, making our combined company much more valuable to our customers.”

Hirsch Electronics President Larry Midland is expected to join SCM’s board of directors and become an executive officer for the combined company. Following the merger, the combined company will be called SCM Microsystems, but SCM and Hirsch products will continue to be marketed under their respective brand names.

The transaction is expected to close in the first half of 2009.

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